6 Dec 2012

West coast bidding process: ‘unacceptable flaws’ says report

The government admits that the inquiry into the West Coast railway line franchise debacle has found “serious problems” as it announces Virgin Trains is to run the service for a further 23 months.

Virgin keeps hold of west coast line for another 23 months (Reuters)

Virgin had been set to lose the west coast franchise which it has operated since 1997, with the government awarding the contract to rival company, FirstGroup. But the deal was scrapped after Sir Richard Branson’s Virgin group launched a legal challenge at the High Court, describing it as “insane”.

Today the Transport Secretary told the House of Commons that an inquiry by businessman Sam Laidlaw into the franchise bidding fiasco, had found “serious problems” and “unacceptable flaws” with the entire process.

“Uncomfortable reading”

Patrick McLoughlin told MPs that he would not hide from the seriousness of the report’s findings, admitting that “they make extremely uncomfortable reading for the department.”

He said the report had also found that department officials had “wrongly calculated the amount of risk capital bidders would have to offer to guarantee their franchise proposals.”

Sir Richard Branson’s rail company Virgin Trains will carry on running services on the London to Glasgow line until 9 November 2014, after which the west coast line will be let under a long-term franchise. It will include a new hourly service from Glasgow to London and other improvements.

Mr Laidlaw’s report reveals for the first time that ministers had granted the original award without being told about the problems, and with inaccurate information.

He listed a series of damning findings, describing “a lack of transparency, inadequate planning and preparation as well as a confusing organisational structure with weak quality assurance and insufficient governance oversight”.

However the report did not find evidence that there had been a culture of bias against Virgin at the DfT.

Three civil servants who were suspended over the fiasco have now had their suspensions lifted. One of the three, Kate Mingay, had launched legal proceedings against the department of transport (DfT) last week.

A spokesman added: “The decision to suspend a member of staff, or to lift that suspension, is separate from the disciplinary process and does not imply any conclusion on culpability”.

New service

Earlier, Mr McLoughlin announced details of the new rail service to be offered by Virgin Trains. “We are determined to ensure not only that passengers continue to experience the same levels of service they have in the past, but that services improve.

“There will be a new hourly service linking Glasgow and London and we will also work with Virgin Trains to explore other service improvements.”

He went on: “I am also extremely pleased that passengers will benefit from up to 28,000 more seats daily thanks to the delivery of 106 new Pendolino carriages on to the west coast line which has happened on budget and ahead of schedule.”

But the government said the DfT would be able to shorten the 23-month period “by up to six months if a subsequent franchise can be let on a shorter timescale”.

Mr Laidlaw had been due to appear before the House of Commons Transport Committee this week, but MPs will now hear his evidence on 18 December. Virgin Rail Group chief executive Tony Collins said: “We will not be sitting back in the coming months, but are keen to introduce more improvements to the service.

“We are proud of what we have achieved since 1997, but there is undoubtedly more to come and we will work closely with the DfT to bring even better services in future.”

The leader of the TSSA rail union, Manuel Cortes, described the report as a “classic Whitehall whitewash”, which did not hold anyone to blame, despite a franchise fiasco which had already cost the public £40 m.

“The long running Whitehall farce that is rail franchising just gets more ludicrous by the day”, he said.

The DfT has now promised to implement all of Mr Laidlaw’s recommendations in full, and promised to go even further to make sure that smilar failures did not happen again.